Right Thinking from the Left Coast

All Your Channels Belong To Us

Comcast said Thursday it had agreed to buy Time Warner Cable for $45 billion in a deal that would combine the two biggest cable companies in the United States.

If the deal is approved, the combined group will be the country’s dominant provider of television channels and Internet connections, reaching roughly one in three American homes.

If this deal goes through, Comcast will control one-third of the cable market, dwarfing any other provider and having virtual monopoly in parts of the country (that’s one estimate; I’ve seen other figures as high as 42%).

There’s some question about whether the Administration will seek to scuttle this deal, as they did the AT&T/T-Mobile deal. Despite my libertarianism, I think they should.

Here’s why: cable is not a free market in this country. It is a controlled market where certain cable companies are given fiefdoms in most cities. They are regulated to some extent, but the consumer really doesn’t have a choice. I have Comcast. In Texas, I had Time Warner. In both instance, I had no real alternative.

If cable were a free market, then I would have a lot less of a problem with this deal since small cable companies would be able to out-compete the leviathan that Comcast/Time-Warner is going to be. But that’s not the case. If this deal were to be approved, it would have to come with a gigantic overhaul of telecom law that allows — or in some cases forces — markets to be open.

I don’t know if the Obama Administration will scuttle this. You may remember that the Most Transparent Administration Ever Which Has Totally Ended the Revolving Door approved Comcast’s acquisition of NBC. Then one of the commissioners who approved the deal got a high-paying job with Comcast immediately after approving the deal. So it’s possible that if Comcast waves enough money and future jobs around, this will go through even if it completely hoses the consumer.

Well, I remember being really pissed off when Playboy suddenly became a scrambled channel and it would cost me an extra $2.50 to get it back. I mean, sure, it was nice to have, but it was really lame as far as content went. So, I stuck with “Basic Plus” which meant that for $2 more than just “Basic” I got HBO, Showtime, Cinemax and all the rest of the premium channels – except Playboy, which still thinks they are worth paying extra for.

The competition would be the satellite providers, both DISH and Directv can go anywhere.

It is a controlled market where certain cable companies are given fiefdoms in most cities.

How would scuttling the deal solve that problem? You would still have some cities where Comcast is your only choice and other cities where Time Warner is the only choice, nothing would change.

Somebody needs to explain to me how paying 6 or 7 times that amount for fewer channels is better..

It is not better for you (the consumer) but it is better for them (the shareholders of the cable companies). And they charge 6 times because they can, simple supply and demand. The gouging is more prevalent between the networks and the cable companies, more so than between the cable companies and the consumer. Networks like Disney, who charge the providers a kings ransom for stations like ESPN.

Rich, the only competition that exists in most cable markets is which provider a locality gives the monopoly to. It occasionally happens that they switch providers. With this merger, most fiefdoms will not have a choice and Comcast will have enough market share to basically dictate the market to their liking.

I check about twice a year, DISH is about 20 bucks less than Comcast per month. For my needs, tv’s in family room, my office, and 2 bedrooms, with HD dual receivers (working 2 tv’s each) DISH gives me the best value.

The other problem with this deal is that, with such a large section of the market, Comcast will have near monopsony power. You may remember the Viacom-Direct TV dispute. This would give Comcast the ability to black out 1/3 of the country. And Comcast is known to behave badly. I was one of the people who got throttled because I was using Vonage and Netflix.